News Corp. Duo Set
To Lead Dow Jones
As Zannino Resigns

By

Sarah Ellison

Updated Dec. 7, 2007 11:59 p.m. ET

Dow Jones & Co. Chief Executive Richard F. Zannino said yesterday that he would resign as News Corp. moved ahead with plans to install a new management team that will be led by veteran News Corp. executive Leslie Hinton and Times of London Editor Robert Thomson.

Mr. Zannino's resignation, which is likely to be the first of a series of executive departures from Dow Jones, highlights the changes about to sweep through the company, publisher of The Wall Street Journal, Barron's and Dow Jones Newswires. News Corp's acquisition, expected to be approved by Dow Jones shareholders at a meeting next Thursday, will end nearly a century of control by the Bancroft family.

In a note announcing his resignation to Dow Jones employees, Mr. Zannino said, "while this was my choice, I'm nonetheless saddened by it." Mr. Zannino added in an interview that being the CEO of a public company is much different than running a division of a much bigger company. "I like running things," he said, "and I thought it was best for the company and for News Corp. and for me to step aside and let them take Dow Jones to the next level." He also said he would be interested in running another media company but would be open-minded about other opportunities.

News Corp. is expected to appoint Mr. Thomson to oversee the editorial operations of Dow Jones, reporting to Mr. Hinton. Mr. Hinton is now executive chairman of News International in London and an executive whose ties to Mr. Murdoch go back four decades. News International houses News Corp.'s English newspapers, including The Times of London, News of the World and the London Sun.

Mr. Murdoch himself is likely to take a hands-on role at his new acquisition. He has a reputation for getting directly involved in the newspapers he owns -- he is chairman of the New York Post, for instance -- and he hasn't shied away from expressing his views about how the Journal should change under his ownership.

Aside from selling and repurchasing the New York Post, Mr. Murdoch hasn't made a big newspaper acquisition since the late 1980s. The acquisition of the Journal, which he publicly coveted for years before officially making an offer, caps a career in which he started with one newspaper in Adelaide, Australia, and built a conglomerate in film, television and the Internet, as well as newspapers around the world.

His purchase of the Journal -- while a relatively small deal for News Corp., with its market capitalization of roughly $64 billion -- isn't without risk. The newspaper industry has been shedding readers and advertisers in recent years, sending newspaper stocks to historic lows and raising questions about the future of the industry. But News Corp. is paying $60 a share -- a 67% premium over Dow Jones's stock price before the bid became public. And Mr. Murdoch has said in numerous interviews since making his bid for Dow Jones in April that he wants to expand The Wall Street Journal on both the digital and print sides. He has indicated a desire to convert the paid-subscription Web site WSJ.com to a free site in hopes of boosting its audience and advertising revenue, although the short-term impact of such a move could be costly.

Furthermore, the troubles facing the newspaper industry have worsened in the three months since the deal was finalized at the end of July. Given Mr. Murdoch's stated plans for further investment in Dow Jones, News Corp. shareholders will be watching to see how he plans to get a return on his money. His experience could serve as a template -- or a cautionary tale -- for the rest of the newspaper industry, where other acquisitions are under way. Later this month, Tribune Co., owner of the Los Angeles Times and Chicago Tribune, is expected to complete its $8.2 billion going-private buyout, which will give effective control of the company to Chicago real estate magnate Sam Zell.

Zannino Bio

ENLARGE

In his brief tenure at the helm, Mr. Zannino, with his reputation as a numbers cruncher, had received generally good marks from Wall Street for shaking up Dow Jones's business operations. But Dow Jones's stock price was stuck in a narrow range before Mr. Murdoch expressed his interested in buying the company over a breakfast on March 29. Read more on his background.

Mr. Zannino, 49 years old, is leaving Dow Jones after less than two years as CEO. He joined Dow Jones as chief financial officer in February 2001, when the company's stock was trading around $60 and the dot-com crash hadn't yet sent share prices plunging. He was named chief operating officer in July 2002.

He became CEO in February 2006, succeeding Peter Kann. Before becoming chief executive, he championed several initiatives, including the launch of a weekend paper on Saturdays and the purchase of the financial-news site MarketWatch. Since becoming CEO, he has created separate business units targeting consumers and business customers, and brought in several executives from other companies. He engineered the acquisition of the half of Factiva that Dow Jones didn't already own from Reuters. It was at a breakfast with Mr. Zannino on March 29 that Mr. Murdoch expressed an interest in buying Dow Jones. Mr. Zannino will leave with a payout of around $19 million.

Some executive recruiters believe the departing Dow Jones leader won't have any trouble finding another CEO perch. "He can write his own ticket," said Hal Reiter, chairman and CEO of Herbert Mines Associates Inc., a New York search firm that specializes in retail and related industries. "He has proved he knows how to make money." Mr. Reiter plans to pursue Mr. Zannino, who previously held senior finance, strategy and operating positions at several companies, including Saks Holdings Inc. and Liz Claiborne Inc.

Mr. Hinton, who with Mr. Thomson will assume day to day management oversight of Dow Jones, is one of Mr. Murdoch's longest-serving executives. He was named executive chairman of News International in 1995; prior to that he held a variety of top positions at different times including CEO of News America Publishing, overseeing titles such as the New York Post, as well as chairman of Fox Television and president of Murdoch Magazines. Mr. Hinton, who is in his early 60s, was born in Liverpool in the U.K. but grew up in Australia after his parents moved there.

The Australian-born Mr. Thomson, 46, is a relative newcomer to News Corp., having joined in 2002 when he took over the editorship of the Times. Before that he was U.S. managing editor of Pearson PLC's Financial Times, where he worked as a reporter and editor for many years after starting his career in Australia at a non-Murdoch newspaper.

While Mr. Thomson will have the publisher's title, the job is likely to be defined differently than in the past. Mr. Thomson isn't expected to have purview over the business side of the Journal, as Mr. Crovitz did, and instead will concentrate on editorial matters. Among those reporting to Mr. Thomson will be both Journal Managing Editor Marcus Brauchli and Journal Editorial Page Editor Paul Gigot, a reporting line defined by the editorial agreement hammered out during the deal negotiations and meant to insulate editorial and news operations of Dow Jones publications from News Corp's business affairs. Mr. Thomson is a longtime friend of Mr. Brauchli. They both worked in Asia, Mr. Thomson for the Financial Times and Mr. Brauchli for the Journal.

It is Mr. Murdoch who is likely to have the most impact, though. While the editorial-independence agreement puts some limits on his role, Mr. Murdoch has broad powers to dictate the business strategy of the properties he owns.

Some of his preferences may diverge from certain longstanding traditions at the Journal. Mr. Murdoch has said he is focused on the front page, telling associates it should take on greater urgency.

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